From 2014 to 2023, the crypto market experienced post-Christmas “Santa Claus runs” eight times in 10 years, with the total crypto market capitalization increasing by 0.69 in the week from December 27 to January 2. % to 11.87%. This phenomenon draws on the definition of Yale Hirsch, who is considered to be the originator of the term "Santa Claus Quote", which originally refers to the market performance of the last five trading days of each year and the first two trading days of the following year.
On the other hand, crypto markets have seen less frequent “Santa Claus runs” in the week before Christmas, having only occurred five times in the past 10 years. Similar to post-Christmas moves, these pre-Christmas gains ranged from 0.15% to 11.56%.
Source: CoinGecko
1. How does the “Santa Claus Quote” perform in the crypto market?
In years without a “Santa Claus run,” the crypto market experienced its largest correction before Christmas in 2017, down 12.12%. This drop was the result of a price collapse that followed that year’s ICO craze. Beyond that, the pre-Christmas crypto market correction was smaller, ranging between 0.74% and 1.25%. Meanwhile, the post-Christmas market corrections in 2021 and 2022 were 5.30% and 1.90% respectively.
It’s worth noting that only three of the past 10 years have seen a “Santa Claus run” in the crypto market around Christmas. These 3 years are:
In 2016, the total crypto market capitalization at that time rose by 11.56% before Christmas and by 10.56% after Christmas;
In 2018, despite a market correction throughout the year, modest gains of 1.31% and 4.53% were recorded around Christmas;
In 2023, the crypto market rose 4.05% before Christmas and 3.64% after Christmas, amid a bear market recovery.
In contrast, the performance of total crypto market capitalization throughout December was more extreme. The overall December market has grown between 16.08% and 94.19% in 5 of the past 10 years. In the case of another 5-year correction, market losses in December ranged from 1.73% to 15.56%.
Generally speaking, the "Santa Claus market" in the crypto market is not a stable phenomenon, and its performance varies significantly and is difficult to predict.
2. Will Bitcoin rise during Christmas?
Over the past 10 years, Bitcoin has experienced a “Santa Claus run” seven times in the week before Christmas, and five times in the week after Christmas. Specifically, Bitcoin’s pre-Christmas gains ranged from 0.20% to 13.19%, while post-Christmas gains ranged from 0.33% to 10.86%. This is consistent with the broader crypto market “Santa Claus” performance.
Bitcoin’s biggest “Santa Claus run” occurred in the week before Christmas 2016, when the price increased by 13.19% and broke through the $1,000 mark.
Source: CoinGecko
Bitcoin’s biggest drop occurred in 2017, not the “Santa Claus run.” At that time, Bitcoin prices fell by 21.30% before Christmas. Additionally, Bitcoin also experienced smaller pre-Christmas losses of 1.37% and 0.11% in 2015 and 2019, respectively. After Christmas, Bitcoin’s price fell between -0.04% and -6.42%.
In other words, if a speculator participated in Bitcoin's "Santa Claus run" every year from 2014 to 2023, buying and selling in the week before Christmas, his average return would be 1.32%; and after Christmas Performing the same operation for a week, the average return is 1.29%. By comparison, if speculators had chosen to participate in Bitcoin price fluctuations throughout December, their average return would have been 9.48%, at least 7 times the Santa Claus return.
However, similar to the “Santa Claus run” in the crypto market, Bitcoin’s “Santa Claus run” effect also exhibits inconsistent characteristics.
3. The “Santa Claus Effect” in the crypto market over the past 10 years
The following is the "Santa Claus Effect" data based on the daily percentage change in the total market capitalization of the crypto market:
Source: CoinGecko
Bitcoin’s “Santa Claus Effect” data over the years is based on the daily percentage change in Bitcoin’s price within each specific time period:
Source: CoinGecko
4. Summary: Methodology
This study, based on data from CoinGecko, examines the daily percentage change in total cryptocurrency market capitalization over the past decade, from December 1, 2014, to January 2, 2024. The research draws on the two most common definitions of the "Santa Claus effect" or "Santa Claus ticker" from Investopedia:
Pre-Christmas period: refers to the week before Christmas, from December 19th to 25th.
Late Christmas period: refers to the last five trading days of the year plus the first two trading days of the following year.
This research is for illustrative and informational purposes only, not financial advice. Always do your own research and exercise caution before investing in any cryptocurrency or financial asset.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reprinted with permission from: (Foresight News)
Original author: Lim Yu Qian
"What's the Christmas quote?" How does it affect the crypto market? Data: The increase over the years has been around 10%." This article was first published in "Crypto City"
